A business buys office equipment for cash. What effect will this transaction have on the accounts?

Question

Quizplus · Accepted Answer

When a business buys office equipment for cash, it results in an increase in the asset account (office equipment) and a decrease in the cash account. Therefore, we will debit the asset account (office equipment) and credit the cash account. This results in an increase in one asset account (office equipment) and a decrease in another asset account (cash account), hence option B is correct. Option A is incorrect because it mentions crediting an expense account which is not applicable in this transaction. Option C is incorrect because it mentions debiting an expense account which is not applicable in this transaction. Option D is incorrect because it mentions debiting a liability account which is not applicable in this transaction. Option E is incorrect because there is a definite change in the accounts due to this transaction.

A Business Buys Office Equipment for Cash